Economy of Rwanda

Economy Of Rwanda

Rwanda is a rural country with about 70% of the population engaged in agriculture. It is the most densely populated country in Africa; is landlocked; and has few natural resources and minimal industry. Primary exports are coffee and tea. The 1994 genocide destroyed Rwanda's fragile economic base, severely impoverished the population, particularly women, and eroded the country's ability to attract private and external investment. However, Rwanda has made significant progress in stabilizing and rehabilitating its economy. In June 1998, Rwanda signed an Enhanced Structural Adjustment Facility with the International Monetary Fund. Rwanda has also embarked upon an ambitious privatization program with the World Bank. Continued growth depends on the maintenance of international aid levels and the strengthening of world prices of coffee and tea.

The Rwandan economy is based on the largely rainfed agricultural production of small, semisubsistence, and increasingly fragmented farms. It has few natural resources to exploit and a small, uncompetitive industrial sector. While the production of coffee and tea is well-suited to the small farms, steep slopes, and cool climates of Rwanda and has ensured access to foreign exchange over the years, farm size continues to decrease.

Prewar population was growing at the high rate of 3% a year. By 1994, farm size, on average, was smaller than one hectare, while population density was more than 450 persons per square kilometer of arable land.